Can Shorten stop the blame game?

Kevin Rudd, running for the prime ministership in 2007, wanted to “end the blame game.” His aspiration was heartfelt, even if, in office, he was soon to discover that reason, economy and common sense were not arguments that worked much in negotiations with the states, and that the only currency of arguments was bribery.

Bill Shorten, the man with a good chance of being prime minister within nine weeks, was a player in Commonwealth state relations during both the Rudd and Gillard governments. For good or ill, he’s at least as adept a negotiator as anyone in the present government, if only because hardly anyone in the present government has done this sort of negotiation well, or for the public interest as opposed to short-term political gain.

Bill Shorten boards the campaign bus after a NDIS rally in 2016.Credit:Alex Ellinghausen

Rudd had worked in the Goss Labor government, in full reform mode after the Fitzgerald royal commission, and had worked with networks of state (and even federal) officials for sensible practical solutions to the problems of federalism in action, particularly when both the Commonwealth and the states were engaged in the field, not necessarily working for the same goals.

With health and hospitals, schools and preschools, social housing, aged care, childcare, crime, terrorism and infrastructure, each of the states and territories had large war-chests, much of it provided by untied grants from the Commonwealth, mostly from GST revenue.

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In almost all these fields, the Commonwealth was supplementing payments to the states in a search for specified outcomes it wanted, or needed, politically. The Commonwealth was also making payments to non-government players, sometimes directly to taxpayers, but often to providers, including big and monolithic players such as the Catholic education system, or the nursing home industry.

It had long been obvious to everyone that the system was inefficient and wasteful, lacked transparency and political accountability and was responsible for duplication, overlap, and local gaps through which people, often the neediest, fell.

Some Commonwealth policies ran directly opposite to state policies. In other cases premiers and chief ministers, or sometimes prime ministers and Commonwealth treasurers, played up or down on the differences for local political purposes. Depending on who was complaining to whom, premiers would blame shortcomings on the Commonwealth, the Commonwealth vice-versa.

In the last Labor governments, Shorten played a smart hand with the idea of national disability services, to the point where many over-credit him for what was achieved. His success involved something more than recognising the merit of plans coming up through the bureaucracy and the productivity commission, and with a pedigree extending back 40 years to the Whitlam government, the Woodhouse schemes, and successful and popular reforms in New Zealand.

Shorten’s genius was in adopting and promoting the discussion of the idea without over-politicising it. He found champions of the idea on the other side of politics – even from Tony Abbott, the opposition leader making a virtual cult of being negative about anything coming from the Rudd and Gillard governments.

Achieving some common purpose at the Commonwealth level was but a first step to getting the agreement of the states, themselves major providers of services to the disability community. At the core of the proposal was the idea that a massive overlap of schemes, at all levels of government, could be rationalised to provide better and more personalised and (it was to be hoped) less bureaucratised services for all.

It is quite true the NDIS has had teething problems and that the boffins underestimated demand. Yet it went from proposal to operation in a remarkably short time.

Given the difficulties that government, Labor and Coalition, have had with “nation-building” developments such as the NBN, and health, school and university “reforms”, it may well be that the NDIS will be judged by history as the most substantial change to the lives of ordinary citizens so far in the 21st century.

It would be nice if we could say the same with the Gonski reforms to primary and secondary education funding, whether of the Mark 1 or 2 variety.

The Gonski committee considered some fundamental problems of imbalance and inequity in the resources going into different school systems, seriously weakening the possibility of many students reaching their potential. The committee looked at types of proven disadvantage resulting from the income and resources available to parents, remoteness, and disadvantages of Aboriginal and migrant children, and established a formula whereby every school, private, Catholic systemic or government, received base funding per student, plus loadings according to the types of disadvantage that existed.

Even better, there was more available so the many different school systems could be grandfathered in, with no one worse off, even if some (disadvantaged schools) received far greater increases than rich private schools.

Opposition Leader Bill Shorten together with Labor caucus pose for photos at the Gonski showcase.Credit:Alex Ellinghausen

The Commonwealth sought to negotiate the new arrangements with the states and territories – eight separate government school systems – and also with independent schools. It also negotiated with Catholic bishops, each controlling funding in their dioceses, often with great disparities of resources and not generally in favour of disadvantaged students, in different places.

The government wanted to get the whole deal through during its term of government. Some states, particularly NSW, came to agreement quickly, even though NSW was a Liberal state dealing with a Labor government. Others, such as West Australia (also a Liberal state) were more fundamentally hostile – if not to the formula then to any idea of being dictated to be the Commonwealth. The Commonwealth, with leadership woes, seemed to have a new education minister every month, but, as the deadlines approached, Shorten was education minister.

He had to deal with scores of “stakeholders”, some, frankly very greedy and aware they had the Commonwealth – clearly outgoing – at a time disadvantage. Shorten signed virtually everyone up, sometimes with little bribes and concessions about base rates and speed of implementation, at other times over much more fundamental principles such as addressing disadvantage.

He agreed, for example, with many Catholic dioceses that they would continue to receive into their treasuries, each year, money allocated according to the formula, including by disadvantage. But the money would go to each diocese as a lump sum, and it was up to the diocese how it divvied up the money among its schools. There was, certainly, no promise that it would go, as per the formula, according to local disadvantage.

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Shorten had also to take some care to ensure states who signed up early were not put at a disadvantage because of their co-operation, with recalcitrant states able to screw the Commonwealth for higher sums. His success came in part because the Commonwealth was so desperate for signatures that it increased the pot of money being divided. It may well have been, as the next prime minister Tony Abbott alleged, that Labor made unfunded promises and concessions, confident that the bill would have to be paid by a new government.

It was a dirty, bitter and acrimonious process, with many of the players, including the Catholic bishops, ramping up the blackmail as the deadlines approached. Critics, including myself, must remember the risks of making the satisfactory the enemy of the perfect. That said, the Commonwealth taxpayer was done like a dinner in the negotiations, and some of the outcomes, particularly with the Catholic systemic schools, ran counter to the basic principles of the Gonski review. They may well have seen a net transfer of money intended for the most disadvantaged towards the Catholic middle class.

One might say this reflects on Shorten’s negotiation ability and suggests the Commonwealth will be a softer touch whenever it really wants, or needs, state co-operation for one of its pet projects.

In fact, however, most Commonwealth-state agreements, over decades, have been full of just the sort of compromise, retreat from principles and sweeteners seen in the Gonski 1 negotiations. As often as not, the Commonwealth has broken a united front from the states and territories by bribing and corrupting state treasurers with extra sums of money for their states, or other little concessions, some having little to do with the actual project. The capacity of the states to allow themselves to be bribed owes no relationship to whether the government is of the same side as the Commonwealth; the greed of state treasurers usually overwhelms everything.

But more is involved than the risk that Commonwealth taxpayers are paying too much, or allowing too much flexibility, for Commonwealth-state projects organised through the council of Australian government. Mostly, the deals are on display, even if (as with Shorten’s deals) they have not been open and transparent at the time binding agreements have been made.

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Much of the real rorting has come instead from failures of the states and territories to spend the money in the quantity and quality promised, to meet basic standards of governance and transparency, to be open to any sort of quality audit. As often as not, accountability for failure to achieve outcomes, or for the way money has been spent, is of a very low standard.

Auditors-general find it hard to follow the money trail once it has passed to another level of government. Australia needs a special national audit office with the power, authority and the will to investigate matters such as cost shifting, improper (though not, strictly, illegal) diversion of funds into other areas, and the mixing of streams of money in such a way that there is no reasonable way one can find out who paid for what.

But just as importantly, we need a new national audit office to look closely at the outcomes being achieved by many joint projects. And able to check lines of accountability, and, if necessary, responsibility (perhaps to individual officer level) for poor outcomes.

There is work aplenty with health and education spending but imagine how much more there would be in a dedicated audit office looking at, say, the building and maintenance of houses in Indigenous communities, or local school-based expenditure in schools assessed as being need. Or looked at combined Commonwealth and state performance in the management of the Murray Darling basin? Or combined state and federal progress on climate change activity? Audits based not on assessments of inputs in various types of activity, but in measurable outcomes.

The Murray Darling Basin Authority was established with just the sort of untidy compromises between government and vested interests, particularly the irrigation lobbies, that was evident in the Gonski negotiations. The states, moreover, were jealous of their prerogatives, because it has never been clear just how far Commonwealth power extends and where it stops. Upstream state water bureaucracies have been notoriously partisan for large water users in their state. Ministers, particularly National party ones, have been transactional in any exercises of discretion about allocations.

We need a new national audit office to look closely at the outcomes being achieved by many joint projects.

The basin authority itself is a governance and accountability nightmare. Its power to do anything is tightly circumscribed by the need for the agreement of each of the relevant states. At both the ministerial and the bureaucratic level, most of the players are, in effect, delegates of their states, rather than servants of an agreed national interest.

The authority’s view (which a recent South Australian Royal Commission says is contrary to its enabling act) is that the allocation of water to the environment, towns or agriculture is a political divvie-up, (conducted according to who makes the loudest clamour) rather than a process governed firstly by an independent scientific assessment of the need for environmental water. Don’t think Labor will be more pure than Barnaby Joyce; Tony Burke, the likely next minister, presided, eight years ago, over the creation of the mess in the first place.

Unless we fundamentally reform lines of accountability in Commonwealth-state joint or co-operative activities we may need a separate public service for bodies such as the basin authority, which are not strictly under purely Commonwealth control. A basin authority employee there because of arrangements with NSW or Victoria (and, effectively, operating as an agent of that state), is, at present in an accountability black hole. I would be fairly sure such an employee was outside the jurisdiction of the NSW ICAC, but I am not sure they could ever be forced into the jurisdiction of a Commonwealth Integrity Commission.

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Sometimes states formally hand over powers within their own constitutional remit to the Commonwealth. In such a case a body administering such powers (or the sum of Commonwealth and state powers) is clearly under Commonwealth control. The position is far less certain when powers are pooled, to be jointly administered, or arrangements are informal, sometimes with officers posted into the other jurisdictions with no clear definition of their powers, responsibilities or lines of accountability.

A lot of politicians, including deal-makers like Shorten (or Scott Morrison) like informal, unclear, uncertain arrangements, if only because it gives them space to manoeuvre and scope to sweeten arrangements according to a political (rather than an administrative or professional) view as to importance of coming to agreement.

But giving room to move is not, or should not be, a blank cheque, or an arrangement allowed to operate outside the eyesight of the umpires. Shorten should set himself a goal of succeeding where Morrison, Turnbull and Abbott, and Gillard and Rudd, and Howard, Keating and Hawke failed. Reforming accountability in Commonwealth-state relations might be his best chance for the history books, not to mention for lasting gratitude from long-suffering taxpayers.